Abstract
Projects and reforms targeting infrastructure services can affect consumer welfare through changes in the price, coverage, or quality of the services provided. The benefits of improved service quality—while significant—are often overlooked because they are difficult to quantify. This article reviews methods of evaluating the welfare implications of changes in the quality of infrastructure services within the broader theoretical perspective of welfare measurement. The study outlines the theoretical assumptions and data requirements involved, illustrating each method with examples that highlight common methodological features and differences. The article also presents the theoretical underpinnings and potential applications of a new approach to analysing the effects of interruptions in the supply of infrastructure services on household welfare.
Highlights
The provision of modern infrastructure services is an important element of poverty reduction strategies in many developing countries, but gaps in access to services persist
Current levels of infrastructure spending need to be increased across the developing world in order to improve service delivery,2 but the efficacy of future investments will depend on the ability to make service providers accountable to policymakers and client households (World Bank 2004a)
Electricity combined with household appliances produces lighting, heat, energy for cooking, and entertainment provided by radio and television
Summary
The provision of modern infrastructure services is an important element of poverty reduction strategies in many developing countries, but gaps in access to services persist. Of the poor households in low-income countries, only 41 percent have access to piped water, only 27 percent have access to improved sanitation, and a mere 10 percent have access to electricity. These statistics are not adjusted for quality of the service and include households that have access to services for only a few hours a day (World Bank 2006). Current levels of infrastructure spending need to be increased across the developing world in order to improve service delivery, but the efficacy of future investments will depend on the ability to make service providers accountable to policymakers and client households (World Bank 2004a). As Bourguignon (2006, p.9) points out, “without systematic initiatives to expand our capacity to monitor infrastructure availability (and deficiencies), along with efforts to improve performance measurement and evaluation, there is little likelihood that the ambitious infrastructure agenda can move forward.”
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